Whistling Past The Obamacare Co-Op Graveyard

New Report: ‘Alerted To Weaknesses,’ HHS ‘Continued To Disburse Loans’ To Failing Co-Ops

“HHS was alerted to weaknesses in the failed CO-OPs’ business plans and financial forecasts before it approved their initial loans; failed to use major accountability and oversight tools available to it throughout 2014 even though it knew of the CO-OPs’ severe financial distress; continued to disburse loans to failing CO-OPs despite warning signs; and allowed CO-OPs to continue to book risk corridor payments as assets despite credible warnings that those payments would not materialize.” (“Failure of the Affordable Care Act Health Insurance CO-Ops,” Majority Staff Report, U.S. Senate Permanent Subcommittee on Investigations, 3/10/2016)

• “[D]espite serious financial warning signs, HHS did not withhold any loan disbursements from the now-failed CO-OPs—and in many cases accelerated planned disbursements. Instead, over the course of 2014–2015, HHS disbursed $848 million in taxpayer dollars to the failed CO-OPs, even as those entities lost more than $1.4 billion. For every dollar that HHS sent them over this period, the failed CO-OPs lost about $1.65.” (“Failure of the Affordable Care Act Health Insurance CO-Ops,” Majority Staff Report, U.S. Senate Permanent Subcommittee on Investigations, 3/10/2016)

Nearly $400 Million Lost By 11 Remaining Obamacare Co-Ops In 2015

“Financial losses at the 11 remaining Obamacare co-ops nearly doubled during the last three months of 2015, approaching $400 million for the year, according to annual reports filed this week. That's nearly equal to the losses sustained by all 23 co-ops during their first year of operations in 2014.” (“Co-op Losses Nearly Doubled Last Quarter,” Politico Pro, 3/02/2016)

“The CMS is closely monitoring the finances of eight of the remaining 11 not-for-profit co-ops created by the Affordable Care Act. . . Eight co-ops are operating under corrective action or enhanced oversight plans, Dr. Mandy Cohen, the CMS' chief operating officer, told the House Thursday. That means the CMS has identified potential problems with operations of those co-ops, but it doesn't necessarily indicate they immediately face bankruptcy or closure.” (“Congress Grills CMS Over Fate Of ACA's Remaining Co-Ops,” Modern Healthcare, 2/25/2016)

Co-Ops in Illinois, Montana, And New Mexico Hemorrhaging Money

“Illinois Obamacare plan crippled by losses” (“Illinois Obamacare Plan Crippled By Losses,” Crain’s Chicago Business, 3/01/2016)

• “The operating losses continue to mount at struggling Land of Lincoln Health, totaling $90.8 million for the Obamacare health plan in 2015. That net loss is almost five times greater than the Chicago-based startup reported in 2014, when it totaled $17.7 million. The insurer lost about $40 million in just the last three months of 2015, according to a new financial statement filed with national insurance regulators.” (“Illinois Obamacare Plan Crippled By Losses,” Crain’s Chicago Business, 3/01/2016)

“Montana Health Co-Op, which also sells plans in Idaho, lost just over $40 million last year - more than 10 times the red ink sustained during its first year of operations.” (“Co-op Losses Nearly Doubled Last Quarter,” Politico Pro, 3/02/2016)

“New Mexico Health Connections lost roughly five times as much money last year, $23 million, as it did in 2014.” (“Co-op Losses Nearly Doubled Last Quarter,” Politico Pro, 3/02/2016)

Reminder: ‘Over Half’ Of Obamacare Co-Ops Have Already Collapsed

“Just over half of the startups seeded with $2.4 billion in federal loans have collapsed because of financial difficulties.” (“Co-op Losses Nearly Doubled Last Quarter,” Politico Pro, 3/02/2016)

“Co-ops collapsed in Arizona, Colorado, Iowa, Kentucky, Louisiana, Michigan, Nevada, New York, Oregon, South Carolina, Tennessee and Utah. The closures forced an estimated 700,000 individuals and small-business employees to obtain new insurance.” (“Republicans Question Viability of Health Co-ops,” The Wall Street Journal, 2/25/2016)

‘Unlikely Much Of That Money Will Ever Be Repaid To The Federal Treasury’

“The losses accrued by the co-ops during the first two years of operations amount to roughly a third of their total loans, making it unlikely much of that money will ever be repaid to the federal treasury.” (“Co-op Losses Nearly Doubled Last Quarter,” Politico Pro, 3/02/2016)

• “Dr. Cohen said she didn’t know if more co-ops would need to be put under heightened review nor how many of the co-ops are making a profit. She also said that some of the roughly $1.2 billion lent to the failed co-ops may not be recovered because the money has already been spent.” (“Republicans Question Viability of Health Co-ops,” The Wall Street Journal, 2/25/2016)

“[T]he heavy costs of failed CO-OPs will be borne by taxpayers, doctors, patients, and other insurers. None of the failed CO-OPs have repaid a single dollar principal or interest, of the $1.2 billion in federal solvency and start-up loans they received. Our investigation suggests no significant share of those loans ever will be repaid based on the latest balance sheets we obtained. . . The closed CO-OPs currently owe a substantial amount of money in medical claims to doctors and hospitals. At least six failed CO-OPs currently owe more in medical claims than they hold in assets.” (“Failure of the Affordable Care Act Health Insurance CO-Ops,” Majority Staff Report, U.S. Senate Permanent Subcommittee on Investigations, 3/10/2016)